Home

Oil Prices Bounce Off Lows

You are here

oil bounces off lows

Oil Prices Bounce Off Lows

Aug 21 2015, 08.17am GMT

STOCK.com

West Texas Intermediate oil futures rebounded from a six and a half year low of $40.76 a barrel on Thursday on the back of a weaker U.S. dollar as September contracts expired.

WTI crude for September delivery (CLU5, +0.34%) gained a weak 34 cents, or 0.8%, to settle at $41.14 a barrel. The small increase does however indicate a positive reaction after a week which saw oil pressured by a weekly increase in crude supplies and continuing concerns about the Chinese economy.

Tyler Richey, co-editor of the 7.00’s Report, commented on the expiration of the September West Texas Intermediate contract saying it, “amplified volatile conditions in an already wild energy market. The primary supporting factor for oil prices today, as well as the general commodity space, was the continued weakness in the dollar which is now down over 1% from the best levels of the week.”

Meanwhile, the ICE U.S. dollar index (DXY, -0.36%), which measures the dollar against a basket of six currencies, was down to 95.9630, having lost 0.4% of its value during the week after finding its bottom at 10.30 am EST on Thursday.

Despite the lower dollar which supported a number of commodities, October Brent crude (LCOV5, -0.94%) lost 54 cents, or 1.2%, to settle at $46.62 per barrel. Brent crude has now recorded its fifth loss in six trading sessions.

Earlier, U.S. oil prices had dropped sharply on Wednesday after the U.S. Energy Information Administration released data showing an unexpected increase of 2.6 million barrels in crude stocks following higher imports on the Gulf Coast.

Matt Smith, director of commodities research at ClipperData said, “A drop in refinery utilization, combined with imports popping above 8 million barrels per day for the first time since April, flip-flopped the expectation of a 2 million barrel draw into the reality of a solid build.”

Citi Futures noted that Saudi Arabian oil exports are rising by 430,000 to 7.37 million barrels per day, according to data from the Joint Organizations Data Initiative, a timely reminder of the global over-supply and oil surplus position.

Reuters meanwhile reports that despite the drop in oil prices, some mutual funds are continuing to invest in oil exploration and production companies in the U.S. in the hope that production will drop sharply during the next 12 months, followed by an upsurge in prices to the $65 - $70 range.

Singapore based Phillip Futures said in a note to clients, “The only silver lining we are seeing coming from the United States is that the refining rates remain high and that crude production continues to fall.”  

Commodities Block Actions

Trading Platforms

MetaTrader

Through a simple native App download, be ready to log on to the powerful, intuitive MT4 platform and trade multiple assets on your desktop or through mobile

More on MetaTrader

WebTrader

Online access - anytime, anywhere - to your secure STOCK.com account, through desktop, tablet and mobile interfaces with no download necessary

More on WebTrader

Trading in CFDs involves significant risk to your invested capital